European countries agree on issue of confiscating Russian assets worth €200bn – FT
Pravda Ukraine
The largest European countries are supporting efforts to confiscate frozen Russian assets worth over €200 billion while developing plans for a ceasefire agreement in Ukraine.
Source: Financial Times with reference to its sources
Details: France and Germany, which have long opposed the full confiscation of assets held in the EU, are discussing ways to use them with the United Kingdom and other countries.
Three people familiar with the talks said French officials had discussed a proposal for European countries to confiscate these assets if Moscow violates a future ceasefire agreement in Ukraine. This is part of efforts to provide security guarantees for Kyiv in the event of a ceasefire agreement.
Supporters of this idea see linking the frozen assets to Russia’s compliance with a possible agreement as a way to pressure Moscow and guarantee Ukraine’s security.
G7 allies froze approximately €300 billion of Russia’s Central Bank assets after Russia’s full-scale invasion of Ukraine in 2022, the vast majority of which – about €190 billion – are held in the Belgian central securities depository Euroclear, with smaller amounts held in France, the UK, Japan, Switzerland and the US.
Currently, the income from these assets, mainly cash and government bonds, is being used to repay US$50 billion loans provided to Ukraine by the G7 countries, but the underlying assets are not affected.
Ukraine, Poland and the Baltic states have long insisted on the confiscation of these assets, but key European capitals, including Berlin, Paris and Brussels, have previously rejected this idea over concerns that such a confiscation could create a precedent in international law.
The European Central Bank is also concerned that the status of the euro as a safe currency for foreign exchange reserves would be jeopardised, as most of the assets are in euros.
French President Emmanuel Macron stated during talks with his US counterpart Donald Trump last week that the immediate seizure of assets would not be “respecting international law”, but these funds could be “part of the negotiation at the end of the war”.
A source familiar with the issue said that future German Chancellor Friedrich Merz had stated that he would consider supporting the proposal to confiscate frozen Russian assets. Merz is expected to discuss the matter with current Chancellor Olaf Scholz on Wednesday, 5 March to align positions ahead of the EU leaders’ summit on Thursday, 6 March. Scholz’s press secretary declined to comment.
UK Prime Minister Sir Keir Starmer stated on Monday, 3 March, that London is considering using these assets.
“Obviously the proceeds and profits are being used,” he said to members of parliament, speaking after signing an agreement with Ukrainian President Volodymyr Zelenskyy over the weekend regarding the UK providing a £2.26 billion loan to Ukraine secured by the proceeds of Russian sovereign assets under sanctions.
Quote from Starmer: “On the [underlying] assets themselves, it’s a very complicated issue. It’s not straightforward. But I do think we need to do more, and we are doing more work to look at what the possibilities are at least, along with other countries.”
Details: Two people familiar with the French proposal said it had been well received by other European allies, but there is still a long way to go before it is agreed.
Supporters of asset confiscation have gained additional traction following the Trump administration’s threats to reduce military support for Ukraine.
“More and more countries are willing to use [frozen asset seizure] as leverage,” one source told the FT.
Previously: Ukrainian President Volodymyr Zelenskyy proposed using a portion of the proceeds from frozen Russian assets to finance the future fund which is expected to be part of an agreement granting the US a stake in Ukraine’s mineral resources.
Background:
- Earlier, Reuters reported that Russia may agree to the use of US$300 billion of its frozen assets in Europe for Ukraine’s reconstruction.
- However, Russia is reportedly insisting that part of these funds be allocated to rebuilding the occupied territories.
- As previously reported by Ekonomicha Pravda, the latest draft of the agreement between the US and Ukraine on mineral resources proposes the creation of a commercial fund that would be 100% controlled by the US, with Ukraine contributing funds to it.
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